NWG // CEO COMMENTS
July - September
I am very proud of and pleased with our third quarter . Our organization has really made a fantastic achievement during a turbulent and challenging time . Net sales decreased by 13 % from SEK 1,685.5 million to SEK 1,470.1 million , but with the current market situation where all major events and sports competitions are cancelled , games are played without an audience , clubs and associations have limited activities and larger conferences and congresses become digital , it is still a good result .
The fact that we then increased the operating result by 37 % from SEK 129.1 million to SEK 176.3 million and thereby improved the operating margin by 4.3 percentage points from 7.7 % to 12.0 % is a very good development . An operating margin of 12 % or higher in a third quarter has actually only been reached by us once before – in 2008 . Then we reached 12.8 %. This makes 2020 second best ever . We achieved a cash flow from operating activities in the quarter of SEK 283.2 million , which is an improvement of SEK 414.3 million compared to the same period last year and once again shows how fast we can adapt when crises occur .
During the third quarter net sales for the Corporate segment decreased by 1 %, Sports & Leisure decreased by 29 %, but Gifts & Home Furnishings experienced a growth of 11 %. Geographically , the main challenge is the US , where net sales decreased by 43 % ( including 5 % negative exchange rate effect ). Most positive is that Sweden had a 4 % growth in the quarter – a strong development in a weak market .
January - September
The year started very good , then crash landed in March , April and May and has since then slowly recovered . The spring months were very intense as we accomplished a major work to lower our costs and secure a good cash flow . Thanks to these measures , and probably previous years ’ investments in products and brands , we have , this far , quickly recovered . Net sales decreased by 13 %, and the US is the major challenge during this period as well with minus 39 % and accounts for SEK 495.7 million of the total drop of SEK 653.7 million . The operating result decreased by SEK 32.3 million from SEK 294.6 million to SEK 262.3 million , but it is notable that the operating margin actually improved from 6.0 % to 6.2 %. It is gratifying to see how quick and decisive our organization has succeeded in lowering the costs and adapting to the current situation .
Cash flow and balance sheet
In addition to the result development , I am very satisfied with our cash flow . For the nine-month period , cash flow from operating activities amounted to SEK 649.1 million , an improvement of SEK 836.4 million compared to the same period previous year . Total credit limit amounted to SEK 3,133.2 million and net debt to credit institutes to SEK 1,629.8 million , which gives an available credit of SEK 1,503.4 million . We have also strengthened the equity ratio , which now amounts to 49.0 %. We have never had a balance sheet that strong and an available credit that large .
The future
It is still very hard to assess the coming quarters . COVID-19 has once again increased in several countries and regions during October , and there is still a great uncertainty about when the US will recover . We will do our best to perform as well as possible during the coming quarters as well . Looking past the COVID-19 crisis , I am totally convinced that we will come out stronger and our assessment is that we gain market shares and develop better than our competitors in basically all areas . I am looking forward to accelerating growth again after the crisis – but still with focus on the operating margin – and continue towards new achievements .
Q3
Torsten Jansson CEO
5 // Q3